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China’s debt-fuelled
growth outlives Bo Xilai
Credit-financed construction projects continue in Chongqing following trial
Tom Hancock
FALLEN Chinese politician Bo Xilai
may have been ritually consigned
to political history at his trial this
week but the country’s leadership
has yet to abandon the debt-fuelled
economic policies he epitomised.
Bo, who mounted a feisty defence
at his five-day trial, won plaudits
for his transformation of the
southwestern megacity of Chongqing,
where he became the city’s
top official in 2007, funded by billions
in loans from state-controlled
banks.
His fingerprints are visible everywhere
in the sprawling metropolis,
from a new light rail system that
snakes across its undulating hills,
to more than 3000 kilometres (1900
miles) of motorways and 48 new
bridges government documents say
were built during his tenure.
Chongqing’s expansion began
with China’s “Develop the West”
campaign to promote growth in the
vast and relatively poorer region in
the late 1990s.
Bo’s supercharged version of a
growth model followed by cities
across China – funded by loans using
land as collateral – made it the
country’s joint-fastest-growing region
in 2011, with an annual GDP
rise of 16.4 percent, according to official
statistics.
Liabilities held by government
financing vehicles in Chongqing
swelled by 184 billion yuan ($30
billion) under Bo, according to an
analysis by Dow Jones newswires
– around US$1,000 for every man,
woman and child in the municipality,
which ranks among the biggest
cities in the world.
Bo’s economic policy could be
summarised as: “Take enormous
amounts of money from the central
government, you spend it, making
your city a better place and making
yourself a hero in the process,” said
James McGregor, chief of greater
China operations for consultancy
APCO Worldwide.
Bo and Chongqing’s government
“went full-speed ahead on re-doing
‘Chinese governments
... build skyscrapers,
town squares, roads
and bridges and
amass huge amounts
of debt.’
Chen Gong
Advisor to local officials
the city, which happened all over
China – and now they’ve got to figure
out how to pay for it”, he added.
Spending included 34 million
square metres (366 million square
feet) of subsidised housing for
Chongqing’s poorer residents, part
of populist policies Bo touted as an
attempt to reduce the wealth disparities
that have soared in China
in recent decades.
“Bo demolished old houses and
gave people new ones, which were
bigger,” middle-aged Chongqing
resident Zhang Renliang said. “He
had good connections – he was able
to make things happen.”
“Chinese governments... are the
world’s largest property developers,”
said Chen Gong, chairman
of Beijing Anbound Information,
a Chinese think-tank that advises
local officials, adding: “They
build skyscrapers, town squares,
roads and bridges and amass huge
amounts of debt.”
Some have touted a party plenum
this autumn as a possible opportunity
for reforms that could
leave behind the Chongqing model
followed by Bo.
Nonetheless Chen said: “There
will be some proposals, but it will
just be a matter of slogans. I don’t
think leaders have a way to change,
because of the huge power of special
interest groups.” – AFP
INDIAN business groups warned
that a land reform bill passed by
the lower house of parliament
could jeopardise investment that
is desperately needed to kickstart
the stuttering economy.
The contentious land acquisition
bill is intended to give farmers
fairer compensation for their land
sought for development, and replace
a 119-year-old law framed by India’s
British colonial former rulers.
The bill passed through the
lower house late Thursday last
week, hailed by the government as
a fair balance between improving
landowners’ rights and streamlining
the process of purchasing land
for industrial projects.
But business groups warned
the bill would send the cost of
projects “sky-high” and stall investment
in manufacturing, infrastructure
and housing at a time of
decade-low economic growth.
“The industry feels that the
cost of acquiring land for the industrial
projects and the realty
sector will go sky-high, which is
something not desirable when
India is facing an economic slowdown,”
said the Associated Chambers
of Commerce and Industry
(ASSOCHAM) in a statement.
The new bill, which must now
be passed by the upper house and
be approved by the president,
stipulates that landowners must
be paid up to four times the market
value of land in rural areas
Property 31
Indian land reform
met with suspicion
Trudy Harris
and two times the value in urban
parts.
It also states the need for rehabilitation
and resettlement of
people who have been displaced
by property purchases.
ASSOCHAM secretary general
DS Rawat said a separate requirement
in the bill to obtain consent
from 80 percent of landholders
before going ahead with a purchase
“will be very difficult, if not
impossible”.
Land acquisition is a politically
charged issue in India, and land
seizures for industrial projects
have sparked bitter clashes between
farmers, tribal groups and
state authorities.
Huge investments, including
construction of a $12-billion plant
by South Korean steel giant POSCO
in eastern India, have been delayed,
sometimes for years.
India’s economy is growing at
its slowest pace in a decade while
the rupee has fallen to record lows
in the last few weeks.
The Federation of Indian Chambers
of Commerce and Industry
said the new bill failed to streamline
antiquated rules for buying
land, warning that the process
would instead now be “stretched
by four to five years”.
The land bill comes as the
Congress party attempts to push
through key reforms ahead of
elections to kick-start the economy
and douse accusations of policy
paralysis after almost a decade
in power. – AFP